A Letter to Investors

Posted by Ranga Jayawardena on Feb 12, 2020
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Beam is the first Marketplace for Virtual Care. We help doctors and patients find each other and connect via billable video appointments. As a founder of a telemedicine startup raising seed capital, I hear a lot of the same questions: why did you choose to build a 2-sided marketplace instead of purely a SaaS company? What are you doing differently? How are you protected from a competitor pivoting to your model? Why are you fundraising now?

In an effort to save some time for both our prospective investors and for myself, I’ve put some thoughts on paper.

Why We’re Building the First Marketplace for Virtual Care

It’s the right time.
Marketplaces can only thrive in markets where consumer demand has reached a certain threshold. In other words, enough people had to want to hail rides before Uber and Lyft could flourish. The same is true in telemedicine, and that time has arrived. Vertically integrated, “full stack” telemedicine companies like Teladoc and Ro have emerged in the last decade, raised billions in venture funding and have capitalized on patient demand for virtual visits. The consensus in healthcare is that every clinic and hospital will need to have a telemedicine feature to stay competitive. If this is true, it follows that a consumer marketplace that will allow patients to discover, evaluate and choose from multiple telemedicine enabled clinics is at minimum a viable company and perhaps a category leading business.

Network effects.
Each new doctor on Beam directly adds value for patients (demand-side users) by increasing the supply and variety of healthcare services. Likewise, every additional patient is a new potential customer for doctors. Simply put, aggregating supply (doctors) drives increased demand (patients) which has a compounding growth effect over time. 

How do we aggregate physician supply?
By offering tools and operational support that we know to be necessary for physicians doing telemedicine, we allow healthcare providers to focus on what they know best; delivering clinical care. In addition to HIPAA-compliant video chat technology, we provide users with a private phone number, a patient-facing website, patient co-pay collection and eligibility detection for insured patients. These features are too often overlooked by telehealth SaaS companies. That being said, what physicians find the most alluring are the abilities to treat a wider geography of patients, take advantage of the already existing demand for virtual care and retain patients that are being targeted by telemedicine companies. 

How does this supply lead to increased demand (patients)?
Increases in number and diversity of supply make for a more attractive offering to patients.

  • We offer multi-channel providers. Patients may require an in-person visit for an acute issue and then prefer video visits for prescription refills, routine follow-ups, etc. Companies like Teladoc that only provide virtual care cannot accommodate the millions of patients that fit this description.

  • Unlike a telemedicine practice like Ro that focuses on one specialty, our provider network spans across multiple specialties (currently 19, including primary care, mental health, urgent care, oncology, dermatology, etc.). This ultimately leads to viral effects, as patients who complete a primary care visit can choose to come back for a dermatology appointment with a different clinic. 

This notion that aggregating supply can dramatically increase demand has been proven across many industries. Companies that have applied this idea effectively have disrupted and dominated time and time again (Amazon, Uber, Facebook). Department stores rediscovered this phenomena in the pre-internet era; by consolidating competing sellers under one roof, malls were able to attract consumers in droves. This allowed sellers to generate more business than others that were spread out, making it practical for businesses to inhabit a single location. Beam is the first company to deploy this strategy in the telemedicine space.

We have veteran telemedicine experience and know the costs of patient advertising.  
Our CEO Sas Ponnapalli founded Plushcare in 2013 and helped scale this telemedicine urgent care practice to $10MM+ in annual revenue. He followed the same overall strategy as other telemedicine practices; hire physicians and invest heavily into paid patient acquisition. This model works, but it only goes so far. Full stack telemedicine companies compete with each other and hospital systems to acquire patients. This level of competition has made paid patient marketing on channels like Google Ads very costly. Our marketplace model allows us to target patients in ways that traditional telemedicine clinics cannot.

 

We’re Making Bets That Are Contrarian to the Norm in Telemedicine. We are...

  • Not wasting investor dollars on patient advertising, an area that telemedicine companies invest heavily in. Our GTM/acquisition strategy is unique, but I’ll save this information for interested investors
  • Not building another telemedicine clinic, nor are we simply another telemedicine enabler/SaaS platform to sell to enterprises
  • Not limiting our platform to a single specialty or use case. We can focus our efforts on the specialties that use our product the most while accumulating data on other specialties that use Beam 
  • Focused on acquiring the widest distribution of healthcare suppliers, to maximize network effects and domain authority  
  • Focused on simplicity: we charge a flat, low commission ($10 per consult)

 

Why Other Companies Can’t Duplicate Our Model

There are 2 types of telemedicine companies: vertically integrated practices and SaaS solutions. Neither of them can do what we do. 

Telemedicine Practices 
Companies that hire their own physicians cannot switch to our model. This would entail allowing outside clinics to compete with their internal hired doctors to treat patients. Full stack companies only pay doctors an average of $20-$30 per consultation; medical practices pay considerably more. In other words, if Teladoc tried to create an open marketplace, their employed providers would make more money if they left Teladoc to work at another clinic.

Telehealth SaaS Solutions 
Enterprise software solutions like Zoom are focused on productivity and making provider time expenditure more efficient. Consumer solutions are focused on how the customer feels when engaging with them. The emotional response of the consumer is a focal point. Eliciting the right response from patients drives viral effects, including repeat patient consultations and patients using Beam across multiple healthcare specialities. In other words, creating a SaaS solution is very different than building a consumer solution. Our defensibility is further strengthened as follows: 

  • Our vision to create a marketplace for virtual care has been a constant since our inception; this is our sole focus and telemedicine is our core competency 
  • SaaS solutions are priced too high to optimize for supplier aggregation
  • Flexibility; once a company has reached some success in their model and market it’s rare to want to and operationally challenging to be able to pivot successfully

There’s a reason why we are the only company with a marketplace solution for virtual care. Our company is rooted in hard-won, unique experiences that Sas Ponnapalli (my Co-Founder) and I learned at Plushcare and Bristol-Myers Squibb, respectively. These experiences have yielded hard-to-replicate expertise and relationships. 

 

Why Are We Fundraising Now?

There are 2 good reasons to fundraise: to find product-market fit or, if you’ve found product-market fit, to grow that business. Today, without investing capital in advertising to healthcare providers, we’ve acquired over 335 doctors across 19 specialties and have healthcare supply in all 50 states. These doctors have pulled patients (22k total) into the platform and are using our app to have billable video consultations with them. We’re raising funds to bring more doctors to Beam and increase our rate of growth in the geographies we’ve chosen to focus on.

 

Sincerely,

Ranga Jayawardena
Co-Founder & COO
Beam Health 

 

Topics: entrepeneurship, startups, healthcare, technology, telemedicine, medtech